[Congressional Record (Bound Edition), Volume 152 (2006), Part 2]
[House]
[Pages 1952-1953]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           SIMPLIFIED USA TAX

  Mr. ENGLISH of Pennsylvania. Mr. Speaker, I ask unanimous consent to 
claim the time of the gentleman from North Carolina (Mr. Jones).
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Pennsylvania?
  There was no objection.
  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Pennsylvania (Mr. English) is recognized for 5 minutes.
  Mr. ENGLISH of Pennsylvania. Mr. Speaker, today I would like to focus 
on an issue that is critical to the survival of America's manufacturing 
base and the stabilization of American growth and job creation.
  While Washington continues to explore initiatives to restrain 
outsourc-
ing and level the playing field for U.S. employers in the international 
trading system, it is imperative that we maximize the Federal 
Government's most potent economic tool, tax policy, to promote growth.
  In order for U.S. employers and businesses to remain competitive in 
the 21st century's global market, Congress must create a Tax Code that 
serves as a source of support to American companies rather than as a 
hindrance.
  I recently introduced legislation, the Simplified USA Tax, or SUSAT, 
to help untangle the web of red tape that individual and corporate 
taxpayers have to navigate every year. My proposal includes a new and 
better way of taxing businesses that will allow them to compete and win 
in global markets in a way that exports American-made products, not 
American jobs. I have studied this issue and I believe that, if enacted 
in America, this innovative approach to business taxation will set the 
worldwide standard and create an opportunity for the United States to 
thrive.
  In fact, many of the provisions included in my bill were recommended 
by the President's advisory panel on Federal Tax Reform as part of 
their Growth and Investment Initiative.
  Under my proposal all businesses, incorporated or not, are taxed 
alike at an 8 percent rate on the first $150,000 of profit and at 12 
percent on all amounts above that small-business level. Additionally, 
all businesses will be allowed a credit of 7.65 percent payroll tax 
that they pay under the current law. One of the most pro-growth 
elements in SUSAT is that all costs for plant and equipment inventory 
in the U.S. will be deductible in the year of purchase.
  There is broad-based support for expensing in Washington. Recent data 
show that orders for capital goods were on a steady decline from early 
2000. However, when Congress passed ``bonus depreciation,'' an 
initiative that I worked on with my colleague, Mr. Weller from 
Illinois, as part of the 2002 and 2003 tax bills, the trend was 
immediately reversed and orders for goods steadily rose.
  Every economic principle and every piece of data tells us that 
immediate expensing must be a major component of any tax reform 
package. It has the highest bang for the buck, about $9 of growth for 
every $1 of tax cut. It has bipartisan appeal, and it directly 
translates into greater competitiveness and better paying jobs.
  Another key component of SUSAT which will make American businesses 
more competitive is border adjustability. SUSAT would end the perverse 
practice, unique among our trading partners, of taxing our own exports. 
The absence of some type of border tax adjustments for exports of 
American-made goods places our businesses, particularly manufacturers, 
at a major disadvantage.
  Any entrepreneur will tell you that whether a product is taxed at the 
corporate level or through a consumption tax paid at the register, the 
burden will fall largely on businesses, which includes the employees 
and shareholders. So when our trading partners rebate the taxes paid to 
their businesses and we do not, it necessarily means that we are at a 
disadvantage.
  Under SUSAT, all export sales income is exempt and imports are taxed 
at a 12 percent rate. In turn, all companies that produce abroad and 
sell back into U.S. markets will be required to bear the same tax 
burden as companies

[[Page 1953]]

that produce and sell from here in the United States. This policy will 
finally take away the bias in favor of imports built into our current 
tax structure, which, in my view, has contributed to our record trade 
deficit, which continues to increase at a breath-taking rate.
  Mr. Speaker, we noticed that on Monday the WTO rejected an appeal of 
an early ruling which found transition rules repealing the export 
subsidy known as FSC/ETI. This decision requires us to come back and 
look again at fundamental reform. Not only are our products at a 
disadvantage in the global marketplace; the EU now has a legal right to 
impose sanctions on American products, giving them an even greater 
competitive disadvantage. Monday's decision makes tax reform even more 
timely and even more essential.
  The other underlying absurdity in our Tax Code is that we currently 
condition territoriality on foreign subsidiaries reinvesting profits in 
foreign countries instead of repatriating the profits for investment in 
the United States. I authored a provision with Senator Ensign that made 
it into the tax law that effectively allowed the repatriation of over 
$300 billion in foreign profits that have come back into the United 
States and have been reinvested into our homeland.
  Anyone who has any doubts that U.S. companies have an incentive to 
keep money abroad has just to look at those figures. Until we change 
our current structure, the foreign companies will continue to reap the 
economic benefits of our tax laws' backwards incentives.
  The time has come for us to move forward on fundamental tax reform, 
and I challenge my colleagues in the House and on the Ways and Means 
Committee to move forward on this issue to engage the Treasury. At a 
time when we need to make sure we are doing everything to make our 
economy competitive, now is the time to move forward on tax reform.

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